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Sovcomflot to consolidate port-related assets

Michelle Wiese Bockman, Moscow - Wednesday 13 August 2008

RUSSIA’S largest shipowner, Sovcomflot, will consolidate its port-related assets under one company as the government-owned corporation prepares for a possible listing in 2009 to fund further diversification into the offshore sector. 

The world’s fifth-largest tanker owner, worth $5bn, is making final preparations to rebrand and rename in a move that will form five divisions, including a newly-established ports company, SCF Terminals. 

The development is part of a major corporate makeover to push Sovcomflot’s status as a leading international energy shipping giant, and will be launched around October. 

Included in the revamp will be a new logo, with ships in the 130-strong fleet repainted as they enter dry dock to match new company design and colours. 

Sovcomflot operates and manages ports via joint ventures for several major Russian energy projects, including Prigorodnoye port serving the Sakhalin II oil and gas project. 

The expanding asset base covers the Black Sea, and includes technical management of an oil and products terminal at the Baltic port of Primorsk, as well as a new crude oil terminal under construction at far east port Kozmino that will export 18m tonnes from 2011. 

Sovcomflot is also investigating replacing the Belokamenka - its floating transhipment oil terminal operating out of Kola Bay - with a double hull floating production storage and offloading vessel. 

“We have a number of small interests but if you add them up it puts together a sizeable list and a big chunk of business,” Sovcomflot vice president of business development Alexander Kurtynin told Lloyd’s List. 

Following the January merger with rival Russian tanker owner Novoship, Sovcomflot’s 130-strong fleet is now “large enough” and the combined company is looking for new growth areas, Mr Kurtynin, an executive board member, said. 

Diversification will focus on Russia’s offshore sector as oil and gas companies move to exploit reserves including the Shtokman LNG and Prirazlomnoye projects in Barents Sea. 

Asked if SCF Terminals could be spun off and listed, Mr Kurtynin said that the unit will be established “in such a way that it might be listed in the future. If times are good and the size is sufficient… but it’s not something that we are actively working on at the moment.” 

He also ruled out the parent Sovcomflot company tapping international equity markets until at least 2009. 

“In 2008 we will not be doing anything, but in 2009 it is possible that shareholder will decide or request us to persue it. But it’s not something that we have ready,” he said. 

“The government alone cannot decide our fate, it has to be the big man in the Kremlin,” he said in reference to Russian president Dmitry Medvedev. “To the best of our knowledge so far the shareholder has not made a decision on whether to list or not,” he said. 

“As management we are trying to make the company ready for this, if and when the owners decide to do it.” 

Mr Kurtynin expects the first phase of any potential listing to be relatively modest, mostly for institutional purposes. 

“But we don’t exclude the possibility that we will have to expand into offshore quite aggressively and to order several rigs and drill ships that will require a couple of billion of dollars in investments. This would be possible but not comfortable to just raise through debt market, so we will go for public equity.” 

Sovcomflot signed a cooperation pact in March with Gazprom to provide offshore services for the government-controlled gas company, and with the Murmansk local government in 2007. 

The corporate rebranding will create the umbrella SCF Group, using the well-known Sovcomflot acronym. Other companies will be SCF Sovcomflot, SCF Novoship, SCT Marpetrol – from the Spanish chemcial carrier acquisition – and SCF Terminals. 

Sovcomflot reported sales in 2007 slightly above $1.2bn.